<strong>Tax Changes</strong>
Primary Principle – Taxes need to be utilised mainly to fund government operations and not for economic incentives. As well usually tax credits have unintended consequences and fail to stimulate the economy.
<strong>Individual Revenue Tax</strong>
<ol>
<li>Get rid of AMT and all tax credits. Tax credits such as these for race horses benefit the handful of at the expense of the several.</li>
<li>Remove deductions of charitable contributions. Why should 1 tax payer subsidize another’s favorite charity?</li>
<li>Reduce the child deduction to a max of three children. The nation is complete, encouraging significant households is pass.</li>
<li>Preserve the deduction of residence mortgage interest. Home ownership strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, the nation will see yet another round of foreclosures and interrupt the recovery of the construction industry.</li>
<li>Permit deductions for educational costs and interest on student loans. It is beneficial for the government to encourage education.</li>
<li>Let 100% deduction of medical costs and well being insurance. In business one deducts the price of making goods. The price of labor is in component the maintenance of ones wellness.</li>
<li>Boost the tax rate to 1950-60s confiscatory ranges, but allow liberal deductions for “investments in America”. Prior to the 1980s the revenue tax code was investment oriented. Nowadays it is consumption oriented. A consumption oriented economy degrades domestic economic well being while subsidizing US trading partners. The stagnating economy and the ballooning trade deficit are symptoms of consumption tax policies.</li>
<li>Remove 401K and IRA applications. All investment in stocks and bonds really should be deductable and only taxed when income is withdrawn from the investment markets. The stock and bond markets have no equivalent to the genuine estate’s 1031 exchange. The 1031 real estate exemption adds stability to the real estate market allowing accumulated equity to be utilized for further investment.</li>
</ol>
(Notes)
<strong><u>GDP and Taxes</u></strong>. Taxes can only be levied as a percentage of GDP. The more rapidly GDP grows the better the government’s capacity to tax. Given the stagnate economy and the exporting of jobs coupled with the huge improve in debt there is no way the US will survive economically with out a substantial increase in tax revenues. The only achievable way to boost taxes is to encourage a enormous improve in GDP.
<u><strong>Encouraging Domestic Investment.</strong></u> During the 1950-60s revenue tax rates approached 90% for leading earnings earners. The tax code literally forced high revenue earners to “Invest in America”. Such policies of deductions for pre paid interest, funding limited partnerships and other investments against earned earnings had the dual influence of developing GDP even though delivering jobs for the developing middle class. As jobs have been developed the tax revenue from the middle class far offset the deductions by substantial income earners.
Right now much of the freed revenue from the upper income earner has left the country for investments in China and the EU at the expense of the US economy. Consumption tax polices beginning in the 1980s made a enormous improve in the demand for brand name products. Regrettably these high luxury goods were too frequently manufactured off shore. Nowadays capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a time when debt and an aging population needs greater tax revenues.
The modifications above considerably simplify individual income tax. Except for accounting for investment earnings which are taxed at a capital gains rate which minimizes annually primarily based on the length of time capital is invested the number of forms can be lowered to a couple of pages.
<strong>Corporate Income Taxes</strong>
<ol>
<li>Remove all Corporate Income Taxes. The structure of the corporate income tax encourages companies to locate off shore such as Halliburton or store profit transfers to other nations. Such activity causes lumpy income streams exactly where some organizations advantage significantly from the international industry and others – specifically small companies – do not.</li>
<li>Replace the Corporate Revenue Tax with a national sales tax. The sales tax is variable based on the percentage of the product manufactured in the US. As a bigger percentage of the product is manufactured more than seas the tax increases. Such a tax encourages firms to retain jobs in America.</li>
<li>Apply sales taxes to services delivered such as Tv, Web Access, dentists and all other solutions that constitute a item. Since the economy is moving from a manufacturing economy to a service economy it makes sense to tax solutions at the point they are delivered. Food sold in retailers is exempt.</li>
<li>Pretty tax sources at the correct price of use.</li>
</ol>
(Notes)
National Sales Tax. Such a sales tax is levied only on newly manufactured goods. As such utilized items are exempt eliminating the substantial expense of regulating the gray market economy of eBay and flee markets. The concept of taxing only newly manufactured goods encourages recycling and is environmentally friendly.
The concept of a sales tax is not regressive. Tax revenues will continue to decline from manufacturing as off shoring and automation continues to lower the cost of manufactured goods. Tax revenues require to be found from other sources if the US is to stay solvent.
<u>Resource Taxes.</u> The largest portion of the trade deficit is for importing oil. Government attempts to fund options such as Ethanol have been miserable failures. Basically by raising taxes on all non renewable sources will result in Adam Smith’s “invisible hand” and the entrepreneurial spirit to generate expense effective options. Because the tax is based on the genuine recovery fees such alternatives will naturally trend towards sustainability in order to stay away from the resource tax. Income collected from a resource taxes paid straight to the common fund reduces the deficit and assists spend down the debt.
Concern about financial contraction due to higher costs of resources is not supportable by the facts. From the 1973 Energy Crisis until the 1990s the resource cost per GDP declined as rates of oil rose. Greater energy prices make the economy more and not less effective. Save Tax Money.
(PFBS-2297lv28)